North Carolina District Court Denies Discrimination Plaintiff’s Attempt to Compel Production of Defendant’s Net Worth Evidence

A ruling from the United States District Court for the Eastern District of North Carolina has denied an employment discrimination plaintiff’s motion to compel production of an individual defendant’s net worth information.  In so doing, the court aligned itself with other federal court rulings that have held that a plaintiff may obtain discovery of net worth information only after first establishing an actual prima facie entitlement to a punitive damages award.

The case, Jackson-Heard v. Elizabeth City State University, is an employment discrimination action brought by Mary Jackson-Heard, a former professor of accounting with the defendant school.  Claiming she was unlawfully terminated, the plaintiff asserted claims of race discrimination, age discrimination, and gender discrimination.  In addition to suing the University, the plaintiff also sued the Dean of the School of Business under 42 U.S.C. Section 1981. Among other relief, the plaintiff sought an award of punitive damages.

The plaintiff served discovery requests seeking detailed information and financial documents relating to the individual defendant’s personal net worth.  The plaintiff claimed that such information was discoverable in order to explore and develop her claim for punitive damages.  The defendant, however, objected to the requests on grounds that they were overbroad, unduly burdensome, and not reasonably calculated to lead to the discovery of admissible evidence.  The plaintiff filed a motion to compel production of the requested information.

In its ruling, the court acknowledged the intended broad scope of discovery.  The court also quoted the language of Rule 26 stating that relevant information, for discovery purposes, need not be admissible at trial so long as it is reasonably calculated to lead to the discovery of admissible information.  At the same time, the court noted the trial court’s broad discretion in determining relevance for discovery purposes.

Turning then to the specific issue at hand, the court acknowledged that a defendant’s financial position is relevant to the issue of punitive damages.  At the same time, however, the court pointed to several federal court decisions that have held that a plaintiff must establish a prima facie case of actual entitlement to punitive damages before requiring production of sensitive financial information.  The court determined that the plaintiff had not yet shown an entitlement to punitive damages and, also, found that the information the defendant had provided was sufficient in any event.  For the reasons, the motion to compel was denied.

The ruling provides defendants with some hope for limiting harassing discovery requests.  Under this ruling and the precedents cited, a plaintiff cannot pry into a defendant’s sensitive financial status by merely asserting a claim for punitive damages.  Instead, the plaintiff must establish that the punitive damages claim has actual merit.

The ruling represents a notable difference in philosophy between federal and state courts in North Carolina.  Frequently, North Carolina’s state court judges take much more liberal views on the permissible scope of discovery in civil lawsuits.  Many times, plaintiffs in North Carolina actions pursue punitive damages claims and promptly serve discovery requests seeking similar documents and information.  Although the scope of discovery standard is theoretically the same under both federal and state rules of civil procedure, state court judges are traditionally far more accommodating to requests for net worth information.

Court Orders Production of E-mails in Employment Discrimination Case

A recent federal case from the Eastern District of North Carolina demonstrates the importance of electronically stored information, or “ESI,” in employment discrimination litigation.  In Freeman v. Dal-Tile Corp., 2012 Westlaw 4577718 (E.D.N.C. 2012) a former employee alleged that she suffered both sexual harassment and racial harassment, as well as a discriminatory discharge and retaliation, at the hands of her former employer.  In an effort to develop these theories, the plaintiff’s lawyers served several interrogatories and requests for production of documents aimed at discovering electronically stored information sent to or received by several specifically identified employees.

In opposing the requests, the employer argued, in part, that electronically stored information generated after the plaintiff’s termination of employment would be irrelevant and, therefore, not discoverable.  The plaintiff, in turn, moved the court for an order compelling production of the requested information.

After summarizing the broadly construed standard of relevance applicable to civil discovery, the court noted that e-mails generated within two months after the termination could contain pertinent historical information, such as “e-mail chains.”   Because the identified e-mail custodians included the HR officer responsible for investigating the plaintiff’s complaints and a regional vice president to whom the findings were reported, the court also found it reasonable to expect these individuals to possess relevant information. 

The court also found the list of search terms reasonably related to the plaintiff’s claims of harassment on the basis of sex and race.  The plaintiff’s lawyers had limited the scope of the requests by identifying specific ASCII strings that would enable keyword searches of preserved e-mails and computer hard drives.  Finding the listed ASCII strings appropriately limited in number and scope, the court agreed with the reasonableness of this requested search method.

Finally, the court dispensed with an argument that production of e-mails could be avoided because the plaintiff did not allege that she had been harassed via e-mail.  The court noted that an issue in the case would be the employer’s knowledge of the harassment and its response to the harassment.  E-mails involving the identified persons and containing the identified search terms could prove relevant to these issues.

For these reasons, the court granted the plaintiff’s motion to compel.  The employer was ordered to conduct a keyword search of preserved e-mails from a two and one-half year period, as well as an image and keyword search of its HR officer’s computer hard drive.

The case illustrates the potential significance of ESI in harassment litigation.  As the ruling confirms, e-mails and other ESI can be used not only to prove the occurrence of harassment, but also the employer’s knowledge and response to it.  The case also reflects the courts’ willingness to require reasonably tailored text searches of ESI.